Jurisdiction is vital in enforcing adjudicator’s decisions – but how can the process of appointing an adjudicator affect the jurisdiction of a decision?
Readers will be familiar with the importance of jurisdiction in adjudicator’s decisions – simply, unless vested with jurisdiction, an adjudicator’s decision will not be enforceable.
Jurisdiction derives from various issues, such as the process of the adjudicator’s appointment and the scope of the matters said to be in dispute.
Only exceptional cases
Over the years, the courts have progressively identified conduct of the parties and the adjudicator which led to decisions being unenforceable because of “no jurisdiction”.
It now seems it is only in exceptional cases that adjudicator’s decisions are not enforced on jurisdictional grounds.
The recent Technology and Construction Court decision in Eurocom Ltd v Siemens Plc (of 7 November 2014) was one such example, where the adjudicator’s appointment (among other things) fell foul of jurisdiction.
“It now seems only in exceptional cases that adjudicator’s decisions are not enforced on jurisdictional grounds”
Unless the parties have agreed an adjudicator, an appointment is normally made by a nominating body (eg RICS, RIBA, TeCSA).
A referring party usually makes representations to a nominating body on adjudicators it thinks are appropriate and, indeed, inappropriate.
Moreover, if the referring party is not content with the nominated adjudicator, it can simply start the process again and seek another nomination.
Dispute over adjudicator
In Eurocom, the referring party applied to the RICS as nominating body and an adjudicator was appointed, who ultimately decided that Siemens was to pay Eurocom c£1.5m.
Siemens refused to pay and Eurocom applied to the court to enforce the adjudicator’s decision.
In relation to the appointment of the adjudicator, the evidence before the court included that Eurocom represented to RICS that specific individuals should not be appointed because they had conflicts of interest.
No details were provided to substantiate conflicts of interest.
“The court considered that Eurocom’s statements to RICS appeared to have been deliberately or recklessly false and deprived the adjudicator of jurisdiction”
The court accepted Siemens’ arguments that the individuals identified by Eurocom did not, in fact, have conflicts of interest (the individuals themselves said so) and also that Eurocom was simply trying to avoid those individuals (including the adjudicator of an earlier dispute between the parties).
The court considered that Eurocom’s statements to RICS appeared to have been deliberately or recklessly false and, as such, fraudulent misrepresentations which invalidated the process of appointment and, therefore, deprived the adjudicator of jurisdiction.
Legitimate reasons needed
The effect of Eurocom’s representations was to improperly limit the pool of potential adjudicators. Accordingly, the adjudicator’s decision was not enforced.
The court also reiterated that the adjudicator did not in any event have jurisdiction to decide matters that were the subject of the earlier adjudication between the parties.
So although referring parties are able to exert some influence over the appointment of the adjudicator, Eurocom highlights that careful thought should be given to representations to a nominating body about suitability or otherwise of particular individuals.
If there are not legitimate reasons to support such representations, referring parties run the risk of securing appointments on fraudulent grounds without jurisdiction.
Digby Hebbard is a partner and Beth McManus a solicitor in the contentious construction team at Trowers & Hamlins